The research analysis focused on three main questions: (1) Does diversion reduce recidivism? (2) Are youths really diverted? and (3) Does diversion save money? The study first surveyed all 74 LEAA-funded juvenile diversion projects that were operating in California during 1974. Police, probation, public, and private agency-operated projects were included. Structured interviews and questionnaires were used to obtain information, and fieldworkers also gathered data through observation. A detailed followup study was then conducted using quasi-experimental designs, individual record searches on approximately 2,500 youths, and official document reviews. The basic findings showed that recidivism was reduced for those youths who had one arrest prior to the 'instant offense,' the offense that had led to their project involvement, but recidivism was neither reduced nor increased for the vast majority of diverted youth who had no prior arrests. In addition, diversion did reduce the volume of justice system processing. Finally, a savings of about $29,000 was realized for every 1,000 diverted, justice system referrals. A series of programs and settings are recommended to meet five valid but often conflicting goals of diversion: avoidance of negative labeling; reduction of unnecessary social control; reduction of recidivism; provision of service or assistance; and reduction of justice system costs. Tabular data, 72 tables, and 19 appendixes containing study-related material are included. A bibliography of 126 citations is given.